Emerging Trends in Real Estate 2016
• PwC – ULI • 12 Month Outlook on Trends • 37th Edition • 1,800+ Real Estate leaders surveyed • 75 Cities
Profitability outlook
2010 17.7%
21.6%
Abysmal to Poor Fair
60.6%
Source: Emerging Trends in Real Estate 2015
Good to Excellent
Profitability outlook
2015 1.1% 24.9%
Abysmal–poor Fair
74.0%
Source: Emerging Trends in Real Estate 2016
Good–excellent
Profitability outlook still Expectations improving are high
2016
1.1%
14.9%
84.0%
Source: Emerging Trends in Real Estate 2016
Abysmal–poor Fair Good–excellent
Look what we found
2016 1.1%
Expectations are high
???? 1.6%
14.4%
14.9%
84.0%
84.0%
Abysmal–poor
Abysmal–poor
Modestly poor–modestly good
Modestly poor–modestly good
Good–excellent
Good–excellent
Source: Emerging Trends in Real Estate 2016
Deja Vu all over again?
2016 1.1%
Expectations are high
2006 1.6%
14.4%
14.9%
84.0%
84.0%
Abysmal–poor
Abysmal–poor
Modestly poor–modestly good
Modestly poor–modestly good
Good–excellent
Good–excellent
Source: Emerging Trends in Real Estate 2016
Emerging Trends Barometer: Buy? Hold? Sell? 4.50
Peak Hold
Peak Sell
4.00
Peak Buy 3.50 3.00 2.50 2.00 1.50 1.00 2010
2011
2012
Buy
Source: Emerging Trends in Real Estate 2016
2013 Sell
Hold
2014
2015
2016
2016 Emerging Trends
18-Hour cities 2.0
Next stop: The suburbs … what is a suburb? Office: A Barometer of Change A housing option for everyone Parking for change
9
Infrastructure: Network it! Brand it!
2016 Emerging Trends
Food is getting bigger and closer Consolidation breeds specialization We raised the capital, now what do we do with it?
The return of the human touch 10
18-Hour Cities 2.0
Emerging Trends outlook ranking change 2010 - 2016 30
20
Markets moving up
Survey respondents favor growth and competitive business and living costs
10
0
-10
-20
Markets moving down
-30
Source: Emerging Trends in Real Estate 2016
2013 San Francisco New York City San Jose
Austin Houston Boston Washington D.C. Dallas/Fort Worth Orange County
Source: Emerging Trends in Real Estate 2016
2016 Out of the top 10 Washington D.C. (24) New York City (15) Orange County (14) Miami (19) Houston (30) Boston (13) Raleigh/Durham (11)
Source: Emerging Trends in Real Estate 2016
Dallas/Fort Worth Austin Charlotte Seattle Atlanta Denver Nashville San Francisco Portland Los Angeles
18-Hour cities 2.0 Dollar Transaction Volume 600%
500%
Expansion
Change from Previous Cycle
400%
Recovery
300%
200%
Expansion
100%
Cost of Doing Business
Cost of Living
2010 112%
2010 119%
2016 99%
2016 112%
Recession
0% 2002 - 2007
2008 - 2009
2010 - 2011
-100%
-200% 2010 top 10 Markets
2016 to 10 Markets
Source: Moody’s Analytics, Real Capital Analytics
2012 - 2015
Next stop: The suburbs… what is a suburb?
Generations are on the move, with millennials the most footloose
Next stop: The suburbs…. what is a suburb? 80% 70%
Where Do People Currently Live? 67%
62%
71%
60% 50% 40% 30% 20% 10% 0%
Millenials (18 to 35)
Generation X (36 to 49)
City Source: U.S. Census Bureau
Suburb
Baby Boomers (50 to 69)
Who is likely to move? Somewhat or Very Likely to move in 5 years All Adults
48%
Millennials
73%
Gen Xers
42%
Baby Boomers
37%
War/Silent
25%
Homeowners
34%
Renters
73%
Next stop: The suburbs…. what is a suburb? It’s all about the kids! 30.00
(millions)
(average age)
28.5
National probability of Living in city center by age of child
28 25.00 20.00 15.00 10.00 5.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
-
Female Millenials (Ages 25 - 35)
27.5
43%
27
41%
26.5
39%
26
37%
25.5
35%
25
33%
24.5
31%
24
29%
23.5
27% 25% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Average Age of First Birth
Source: City Observatory, National Vital Health Statistics, U.S. Census Bureau
Age
Office: Barometer of Change
Source: CoreNet Global, PwC
2000
2010
253 sf per worker
225 sf per worker
Number of workers per 1,000 sf
Source: Corenet Global, PwC
2020 ?
138 sf per worker
10-year labor force poses the question…
…Who is in charge?
Persons
600,000
410,616 400,000
2026
2016 - 2026
11.3%
200,000
13.8%
44.3%
-
30.6% 00’s
(200,000)
10’s
(400,000)
(483,520)
(600,000)
% of total labor market
(800,000) (1,000,000)
(894,136)
Leaving
Joining
Shortage
Source: U.S. Census Bureau, Bureau of Labor Statistics, PwC
Millennials
Gen X
Boomers
Gen Z
It’s 2026…Who’s in charge?
Millennials
Gen X 30.6%
44.3%
11.3% 13.8%
Gen Z Boomers
Source: U.S. Census Bureau, Bureau of Labor Statistics, PwC
Small Business, Big Impact Company size: Company size:
50-499 employees
1-49 employees 37.8%
46.5%
6.0%
9.8% % of total employment growth since 2013
Company size:
Company size:
500-999 employees
1,000+ employees
Source: Bureau of Labor Statistics, PwC
Good Bones? 30.0%
35,000
80’s 30,000
25.0%
25,000 20.0%
40’s 70’s
15.0%
50’s
60’s
90’s 90s
20,000
00’s 10’s
00s
15,000
10s
10.0%
10,000
5.0%
5,000
0.0%
-
Total Office Employment (000s) Percent of Total Office Inventory by Decade of Construction Source: U.S. Energy Information Administration, Bureau of Labor Statistics, PwC
A Housing Option for Everyone
Can you rent the American dream?
Rent as % of Median Income Richmond Jacksonville Virginia Beach/Norfolk Philadelphia Dallas/Fort Worth Chicago Charleston Houston Orlando US Nashville Greenville Deltona/Daytona New Orleans Washington DC-District CapeCoral/Fort Myers/Naples Boston San Jose Palm Beach San Francisco Fort Lauderdale New York-Manhattan Miami Los Angeles New York-Brooklyn
31.4%
20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Source: U.S. Census Bureau, Core Logic
Own as % of Income Nashville Jacksonville Charlotte Salt Lake City Milwaukee Orlando US Tucson Charleston Sacramento Washington DC-District Boston Fort Lauderdale Palm Beach Seattle Miami CapeCoral/Fort Myers/Naples Los Angeles San Diego New York-Brooklyn Orange County San Jose Oakland/East Bay San Francisco New York-Manhattan 20.0%
37.6%
70.0%
120.0%
170.0%
Homeownership: Share of Each Generation 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0
U.S. Total
